Indonesia considers increasing energy subsidies to curb inflation

The Indonesian government is considering increasing energy subsidies, including fuel, electricity, and air travel, to control inflation ahead of the Christmas and New Year holiday period. Minister of Home Affairs Tito Karnavian stated that these measures are necessary to anticipate rising demand for goods and services caused by increased mobility across land, sea, and air routes.

Concurrently, the government has raised its budget allocation for energy subsidies and compensation to Rp 500 trillion for 2026, up from an initial Rp 338 trillion. Finance Minister Suahasil Nazara attributed this increase to rising global crude oil prices, noting that the Indonesia Crude Price (ICP) reached an average of US$ 93 per barrel through late October 2026. This budget adjustment aims to manage increased payments to state-owned enterprises PT Pertamina and PT PLN.